The surprise announcement came at a hearing called to discuss what to do with proceeds from the sale of permits to emit greenhouse gases, the first of which is expected to flow into state coffers late this year.

Nichols’ announcement stole the headlines, though she said that the new auction date will not affect the overall timeline for implementation and that August will now be a “practice auction.”

“We’ll give everybody a free round in August where the auction won’t really count,” Nichol told me. “So that gives all the stakeholders, including of course, all the companies that are going to have to be purchasing allowances at the beginning an opportunity to see how the system will actually work.”

The rest of the hearing returned to the business of how the expected revenue from trading carbon “allowances” — which could exceed $1 billion in the first year — may be spent. It’s likely that the money will be considered a regulatory fee, which means that legally it can only be spent on programs that further the goals of AB 32 — namely greenhouse gas reduction.

“That makes sense, right, you don’t want the state collecting regulatory fees and then turning around and using them for unrelated revenue purposes,” explained Cara Horowitz, a law professor at UCLA who gave testimony at the hearing. The good news is that the state already runs several programs that fit these requirements, and the money could fund new programs as well.

I asked Nichols what she found most helpful from the hearing moving forward. She cited testimony given by Paul Hibbard, vice president of Analysis Group, who reviewed the economic impact on states participating in the Regional Greenhouse Gas Initiative (REGGI) after the first three years. REGGI is often cited as a test case for carbon trading in the U.S., though the Northeastern program applies only to electric power producers. California’s program will ultimately be much broader in scope.

Ten eastern states participate in REGGI and each can use its revenue for whatever policy purposes it likes. “Those who chose to target their use of the revenues towards energy efficiency were the ones who generated the most new jobs and new economic opportunities,” said Nichols. Is that a hint for where California could be headed? Possibly but it won’t be up to Nichols to make that call. Ultimately, it’s up to the legislature to decide during the budgeting process.

California’s ranchers could face a tougher economic future under climate change. The grasslands they depend on to feed their cattle could shrink by almost 40% by the end of the century, according to a study from Duke University and the Environmental Defense Fund.

The researchers modeled two different climate futures for California: a warmer, wetter scenario and a warmer, drier one. The study showed that by the end of the century, California’s shrublands could increase as much as 70% under the worst-case dry scenario, taking over historic grasslands and other ecosystems.

“This could put an additional economic burden on our ranching industry as ranchers would have to replace natural feed by purchasing hay,” says study author Rebecca Shaw of the Environmental Defense Fund. “We calculated that replacing lost forage caused by climate change with extra hay will hike costs for the California ranching industry by up to $235 million per year by 2070.”

Shaw says shrubs would have an ally in higher levels of carbon dioxide in the atmosphere, which could enhance their ability to withstand drought compared to grasses. A future with more frequent but lower-intensity fires could also help shrubs, since less intense fires wouldn’t wipe out trees and shrubs as often. That’s the model used in the study, but Shaw says “if climate change were to result in more frequent, higher intensity fires that killed shrubs and trees, rangelands have a better chance.”

“It’s going to potentially impact our entire ecosystem that we rely on for forage production.”

At a rangeland summit at UC Davis last week, Tim Koopman, first vice president of the California Cattlemen’s Association, agreed that climate change is becoming a reality for ranchers. “It’s going to potentially impact our entire ecosystem that we rely on for forage production. It’s certainly going to impact all the other natural resources that we’ve worked to steward for so many years.”

But Koopman says there may be a role for ranchers in mitigating climate change. The Cattlemen’s Association joined the California Rangeland Conservation Coalition and several environmental groups in sending a letter to the California Air Resources Board last year, asking them to develop a way for rangeland to be part of California’s upcoming carbon market. Ranchers would like to sell carbon credits for managing their land in a way that sequesters carbon and for the avoided development of their land.

“In general, I think ranchers have been skeptical of AB 32,” says Koopman. “But if it’s going to be implemented, I think the rancher and landowner community would be interested in participating. It’s potentially another revenue stream that may be able to offset climate change and other factors that may hurt us.”

Environmental groups are joining ranchers toward that end. “We don’t have to be victims of climate change,” says the EDF’s Shaw. “Ranchers can adopt practices that help to store more carbon in their rangelands which will reduce greenhouse gas emissions while making their soils more fertile.

“This allows ranchers to be part of the climate solution,” Shaw went on, “and to benefit from the California carbon market under AB 32. It’s important that we think about preventing rangeland conversion and help to keep ranchers ranching.”